Analysts On VF Corp's Tough Road: 'Higher Costs, Softer Sales, And A Higher Tax Rate'

Shares of VF Corp VFC were trading lower on Thursday, after the company reported weak results for its fiscal fourth quarter.

The results came amid an exciting earnings season. Here are some key analyst takeaways.

BofA Securities On VF Corp

Analyst Lorraine Hutchinson maintained an Underperform rating, while cutting the price target from $13 to $11.

VF Corp reported an adjusted loss of 32 cents per share, compared to expectations of adjusted earnings of 2 cents per share, due to "higher costs, softer sales, and a higher tax rate," Hutchinson said. For the current quarter, management expects a similar decline in sales and gross margin contraction as reported for the fiscal fourth quarter, she added.

"VFC refrained from providing detailed F25 guidance except to say it expects gradual sales improvement through the year," the analyst wrote. She further stated that it is time for the company to "turn around key brands (Vans, TNF) and get leverage back to a more acceptable level."

Check out other analyst stock ratings.

Goldman Sachs On VF Corp

Analyst Brooke Roach reiterated a Neutral rating, while reducing the price target from $12.50 to $11.00.

VF Corp witnessed "outsized margin pressure" in the fiscal fourth quarter and lowered its full-year free cash flow guidance from around $900 million to $600 million, "inclusive of select non-core asset sales," Roach said.

The company also provided an update on the progress of its Reinvent transformation program, which included the announcement of new CFO Paul Vogel, the completion of the company's strategic portfolio review and projections of a "sequential improvement in sales momentum each quarter (outside of F1Q) as the company completes channel inventory resets and reinvests in brand and innovation," the analyst wrote.

"While management indicated the turnaround was progressing as expected and VFC pointed to select greenshoots beginning to emerge, trends remain challenged for the business overall," he added.

JPMorgan On VF Corp

Analyst Matthew Boss reaffirmed a Neutral rating and price target of $12.

VF Corp's operating margins missed consensus by around 460 basis points (bps), driven by gross margin contraction of 120bps, adjusted SG&A deleverage of 650bps, and a 13.4% decline in revenues, Boss said. He added that the company faces an "uphill FY2025 battle."

Management's fiscal 2025 free cash flow guidance implies net income of $330 million to $340 million, which translates to earnings of around 85 cents per share, which is about 35% below consensus of $1.29 per share, the analyst added. He lowered his adjusted earnings forecast for fiscal 2025 from $1.02 per share to 85 cents per share.

VFC Price Action: Shares of VF Corp were down 4.3% to $11.79 at the time of publication on Thursday.

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